Conditions for depreciation allowance and development rebate
Conditions for depreciation allowance and development rebate
34. (1) The deductions referred to in sub-section (1) of section 32 shall be allowed only if the prescribed particulars have been furnished; and the deduction referred to in section 33 shall be allowed only if the particulars prescribed for the purpose of clause (i) and clause (ii) of sub-section (1) of section 32 have been furnished by the assessee in respect of the ship or machinery or plant.
(2) For the purposes of section 32—
(i) the aggregate of all deductions in respect of depreciation made under sub-section (1) of section 32 or under the Indian Income-tax Act, 1922 (11 of 1922) or under any Act repealed by that Act or under the Indian Income-tax Act, 1886 (2 of 1886), shall, in no case exceed the actual cost to the assessee of the buildings, machinery, plant or furniture, as the ease may be;
Explanation.—Where a capital asset is transferred by a company to a subsidiary company, then, if the conditions of clause (iv) of section 47 are satisfied, in determining the aggregate of all deductions in respect of depreciation under this clause, account shall also be taken of the deductions in respect of depreciation allowed in the case of the company from which the asset has been transferred.
(ii) nothing in clause (i) or clause (ii) or clause (iv) of sub-section (1) of section 32 shall be deemed to authorise the allowance for any previous year of any sum in respect of any building, machinery, plant or furniture sold, discarded, demolished or destroyed in that year.
(3) (a) The deduction referred to in section 33 shall not be allowed unless an amount equal to seventy-five per cent of the development rebate to be actually allowed is debited to the profit and loss account of the relevant previous year and credited to a reserve account to be utilised by the assessee during a period of eight years next following for the purposes of the business of the undertaking, other than—
(i) for distribution by way of dividends or profits; or
(ii) for remittance outside India as profits or for the creation of any asset outside India:
Provided that this clause shall not apply where the assessee is a company, being a licensee within the meaning of the Electricity (Supply) Act, 1948 (4 of 1948) or where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958.
(b) If any ship, machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed, any allowance made under section 33 or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922) in respect of that ship, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act, and the provisions of sub-section (5) of section 155 shall apply accordingly:
Provided that this clause shall not apply—
(i) where the ship has been acquired or the machinery or plant has been installed before the first day of January, 1958; or
(ii) where the ship, machinery or plant is sold or otherwise transferred by the assessee to the Government, a local authority, a corporation established by a Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); or
(iii) where the sale or transfer of the ship, machinery or plant is made in connection with the amalgamation or succession, referred to in sub-section (3) or sub-section (4) of section 33.
[As amended by the Finance Act, 1962]